Boston Scientific Corp. received Food and Drug Administration approval for a new drug-coated stent in the U.S. called Ion that the company hopes will lead to improved market share.
Ion uses a new stent scaffold that Boston Scientific has billed as stronger and easier to install. The company's market research indicates that about 80% of U.S. stent-implanting doctors will give Ion a try. [I doubt it.]
"We believe we are very well positioned to take share in the U.S. with the introduction of the Ion stent," Chief Financial Officer Jeffrey Capello said on an earnings call last week.
But analysts have more muted expectations, noting that Ion doesn't use the most popular stent medication.[I.e. it uses paclitaxel rather than everolimus.]
Drug-coated stents are tiny metal tubes that prop open clogged heart arteries and use medication to combat tissue growth that could narrow vessels and prompt more procedures. The devices represent a $4 billion global market that is under significant pressure from sliding product prices.
In the domestic market, Boston Scientific's current top-selling coated stent is called Promus. Abbott Laboratories makes this stent—and gets a cut of the profits—through a deal with Boston Scientific, and Abbott also sells the device under the name Xience. Promus and Xience use a drug called everolimus[furnished by NVS—the same drug as in Afinitor and Certican].
Boston Scientific also sells Taxus-brand stents in the U.S. that are made in house and are therefore more profitable. But these stents use the drug paclitaxel and have been losing ground to the everolimus-based stents based on strong study data for those products[#msg-54841998, #msg-41731638, #msg-54842212, #msg-38097301].
The newly approved Ion stent—known as Taxus Element in Europe—also uses paclitaxel.
"I don't think [Ion] draws patients over," Jefferies & Co. analyst Raj Denhoy said.
Ion is part of a newer Boston Scientific stent line, already on sale in Europe, that uses a new platinum-chromium platform with both drugs. The Promus Element stent—which deploys everolimus on that new platform—is seen as the more important new stent because of the popularity of other everolimus-based devices and Boston Scientific's success with Promus Element in Europe.
Boston Scientific plans to roll that stent out in the U.S. by mid-2012, when the domestic supply agreement for the older Promus version with Abbott expires. That rollout is seen as a key part of Boston Scientific's effort to improve earnings.
While Wall Street has low expectations for Ion, the stent's domestic arrival does mark a milestone in that it represents the first U.S. approval for Boston Scientific's new platform. Monday's news therefore removes concerns about the Promus Element application, including a still-unapproved scaffold, Collins Stewart analyst Tao Levy said.
He sees potential for Ion to help Boston Scientific hold its market-share ground and perhaps improve its problem with consistently eroding stent prices because new products can fetch higher price tags.
Excluding some sales return reserves ahead of the domestic Ion launch, Boston Scientific estimated last week that Taxus stents had 14% U.S. market share in the first quarter, compared with 32% for Promus[~60% for Taxus/Promus combined]. Paclitaxel-based stents represented about a quarter of the company's global coated-stent sales in the quarter.‹
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